HB-4325, As Passed House, April 26, 2017

SUBSTITUTE FOR

HOUSE BILL NO. 4325

     A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending sections 1204a and 1204c (MCL 500.1204a and 500.1204c),

section 1204a as amended by 2008 PA 575 and section 1204c as

amended by 2008 PA 574; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1204a. (1) To qualify as a registered insurance agent

producer program of study, the program of study shall must meet all

of the following criteria:

     (a) Be conducted through an educational institution offering

home study courses that has been in existence for not less than 5

years, by an insurance trade association, by an authorized insurer

as provided in subsection (2), or by an educational institution

listed in the state board of education directory of institutions of

higher learning.

     (b) Except as provided in subsection (2), provide for a

minimum number of hours of classroom instruction or its equivalent

in home study or online courses as follows:

     (i) For a program of study for health insurance producers, 20

hours of instruction.

     (ii) For a program of study for life insurance producers, 20

hours of instruction.

     (iii) For a combined program of study for life and health

insurance producers, 40 hours of instruction.

     (iv) For a program of study for property insurance producers

and solicitors, 20 hours of instruction.

     (v) For a program of study for casualty insurance producers

and solicitors, 20 hours of instruction.

     (vi) For a program of study for personal lines producers, 20

hours of instruction.

     (vii) For a program of study for property and casualty

producers and solicitors, 40 hours of instruction. A program of

study completed under this subparagraph satisfies the program of

study requirements for personal lines producers and solicitors.

     (c) Include instruction in ethical practices in the marketing

and selling of insurance.

     (d) Instruction shall Subject to subsection (5), instruction

must be given only by individuals who meet the qualifications

required by the commissioner. director. The commissioner, after

consulting the insurance agent education advisory council, director

shall promulgate rules prescribing the criteria that must be met by

a person in order to render instruction in a registered insurance

agent producer program of study.

     (2) An authorized insurer may conduct that portion of the

minimum number of hours of instruction under subsection (1) as the

commissioner director considers appropriate. Any combination of

classroom, online, or self-study hours may be used in satisfying

the minimum number of hours of instruction under subsection (1).

     (3) The commissioner director shall promulgate rules

prescribing the subject matter that a program of study must possess

to qualify for registration under this section.

     (4) The commissioner director may make recommendations for

recommend improvements in course materials as considered necessary

by the commissioner. director. The commissioner director may, after

notice and opportunity for a hearing, withdraw the registration of

a program of study that does not maintain reasonable standards as

determined by the commissioner director for the protection of the

public.

     (5) For a registered insurance producer program of study under

this section, the director may refuse to approve an insurance

education instructor, and the director may place an approved

insurance education instructor on probation or suspend or revoke

approval of an approved insurance education instructor, or take any

combination of these actions, if 1 or more of the following apply:

     (a) The insurance education instructor violates an insurance

law or violates a rule, subpoena, or order of the director or of

another state's insurance commissioner.

     (b) The insurance education instructor uses fraudulent,

coercive, or dishonest practices or demonstrates incompetence,

untrustworthiness, or financial irresponsibility in the conduct of

business in this state or outside this state.

     (c) The insurance education instructor's insurance producer

license or its equivalent is revoked in conjunction with a

disciplinary action in any state, province, district, or territory.

Sec. 1204c. (1) As used in this section:

     (a) "Hour" means a period of time of not less than 50 minutes.

     (b) "Insurance producer" means a life-health agent or

property-casualty agent.

     (c) "Life-health agent" means a resident or nonresident

individual insurance producer licensed for life, limited life,

mortgage redemption, accident and health, or any combination

thereof.

     (d) "Property-casualty agent" means a resident or nonresident

individual insurance producer or solicitor licensed for automobile,

fire, multiple lines, any limited or minor property and casualty

line, or any combination thereof.

(1) (2) An insurance producer's hours of study accrued under

this section shall must be reviewed for license continuance every 2

years under a schedule established by the commissioner. director.

The commissioner director may establish a schedule for license

continuation that staggers license continuation dates to apportion

the continuation dates throughout the calendar year. If the system

of staggered continuation is adopted, the commissioner director may

extend the licensure period for some licensees.

(2) (3) Except as provided in subsections (10) (9) to (13),

(12), and subject to subsection (13), before the review date of

each applicable 2-year period provided for under subsection (2),

(1), an insurance producer wishing to renew his or her license

shall renew his or her license by attending or instructing not less

than 24 hours of continuing education classes approved by the

commissioner director or 24 hours of home study or online training

if evidenced by successful completion of course work coursework

approved by the commissioner. director. Of the 24 hours of

continuing education required, not less than 3 hours shall must be

in ethics in insurance classes or course work.coursework.

(3) (4) After reviewing recommendations made by the council

under section 1204b, the commissioner the director shall approve a

registered insurance producer program of study if the commissioner

director determines that the program increases knowledge of

insurance and related subjects as follows:

     (a) For a life-health agent program of study, the program

offers instruction in 1 or more of the following:

     (i) The fundamental considerations and major principles of

life insurance.

     (ii) The fundamental considerations and major principles of

health insurance.

     (iii) Estate planning and taxation as related to insurance.

     (iv) Industry and legal standards concerning ethics in

insurance.

     (v) Legal, legislative, and regulatory matters concerning

insurance, the insurance code, and the insurance industry.

     (vi) Principal provisions used in life insurance contracts,

health insurance contracts, or annuity contracts and differences in

types of coverages.

     (vii) Accounting and actuarial considerations in insurance.

     (viii) Principles of agency management, excluding

telemarketing or other marketing instruction.

     (ix) The fundamental considerations, major principles, and

statutory requirements of long-term care insurance.

     (b) For a property-casualty agent program of study, the

program offers instructions in 1 or more of the following:

     (i) The fundamental considerations and major principles of

property insurance.

     (ii) The fundamental considerations and major principles of

casualty insurance.

     (iii) Basic principles of risk management.

     (iv) Industry and legal standards concerning ethics in

insurance.

     (v) Legal, legislative, and regulatory matters concerning

insurance, the insurance code, and the insurance industry.

     (vi) Principal provisions used in casualty insurance

contracts, no-fault insurance contracts, or property insurance

contracts and differences in types of coverages.

     (vii) Accounting and actuarial considerations in insurance.

     (viii) Principles of agency management, excluding

telemarketing or other marketing instruction.

(4) (5) A provider of a program of study for insurance

producers applying for approval or reapproval from the commissioner

director under this section shall file, on a form provided by the

commissioner, director, a description of the course of study

including a description of the subject matter and course materials,

hours of instruction, location of classroom, qualifications of

instructors, and maximum student-instructor ratio and shall pay a

nonrefundable $25.00 filing fee. Any material change in a program

of study shall require requires the reapproval by of the

commissioner. director. If the information in an application for

approval or reapproval is insufficient for the commissioner

director to determine whether the program of study meets the

requirements under subsection (4), (3), the commissioner director

shall give written notice to the provider, within 15 days after the

provider's filing of the application for approval or reapproval, of

the additional information needed by the commissioner. director. An

application for approval or reapproval shall be is considered

approved unless disapproved by the commissioner director within 90

days after the application for approval or reapproval is filed, or

within 90 days after the receipt of additional information if the

information was requested by the commissioner, director, whichever

is later.

(5) (6) A provider of a program of study approved by the

commissioner director under this section shall pay a provider

authorization fee of $500.00 for the first year the provider's

program of study was is approved under this section and a $100.00

provider renewal fee for each subsequent year thereafter that the

provider offers the approved program of study.

(6) (7) A person dissatisfied with an approved program of

study may petition the commissioner director for a hearing on the

program or the commissioner director on his or her own initiative

may request a hearing on a program of study. If the commissioner

director finds that the petition to have been was submitted in good

faith, that the petition if true shows that the program of study

does not satisfy the criteria in subsection (4), (3), or that the

petition otherwise justifies holding a hearing, the commissioner

director shall hold a hearing pursuant to under chapter 4 of the

administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to

24.287, within 30 days after receipt of the petition and upon on

not less than 10 days' written notice to the petitioner and the

provider of the program of study. If the commissioner director

requests a hearing on a program of study on his or her own

initiative, the commissioner director shall hold a hearing pursuant

to under chapter 4 of the administrative procedures act of 1969,

1969 PA 306, MCL 24.271 to 24.287, upon on not less than 10 days'

written notice to the provider of the program of study.

(7) (8) If after a hearing under subsection (7) (6) the

commissioner director finds that the program of study does not

satisfy the requirements under subsection (4), (3), the

commissioner director shall state, in a written order mailed first-

class to the petitioner and provider of the program of study, his

or her findings and the date upon on which the commissioner

director will revoke approval of the program of study, which date

shall must be within a reasonable time of the issuance of the

order.

(8) (9) A certificate of attendance or instruction of in an

approved program of study or a certificate of successful completion

of course work shall coursework must be filed as directed by the

commissioner director on a form prescribed by the commissioner

director and shall must indicate the name and number of the course

of study, the number of hours, dates of completion, and the name

and number of schools attended or taught by the insurance producer

or the evidence of successful completion of course work.

coursework. A representative of the approved program of study shall

file the form and a fee of $1.00 per hour for course credit for

each insurance producer license renewal as directed by the

commissioner director within 30 days after the insurance producer

completes the program. A copy of the form shall must also be mailed

first-class to the insurance producer who attended, taught, or

successfully completed the program of study. The commissioner

director may enter into contracts to provide for the administrative

functions of this subsection.

(9) (10) The commissioner director shall waive the continuing

education requirements of this section for an insurance producer if

the producer is unable to comply with the continuing education

requirements of this section due to because of military service or

if the commissioner director determines that enforcement of the

requirements would cause a severe hardship. The commissioner

director shall waive the continuing education requirements of this

section for the following insurance producers:

     (a) An insurance producer who is licensed to write only travel

or baggage insurance policies and whose employment is for a purpose

other than the sale of those policies.

     (b) An insurance producer who is licensed to write only

limited line credit insurance.

(10) (11) The commissioner director may enter into reciprocal

continuing education agreements with insurance commissioners from

other states.

(11) (12) If an insurance producer has not met his or her

continuing education requirements by the expiration date of his or

her license, the insurance producer shall have has a 90-day grace

period in which to meet the continuing education requirements of

this section. During the 90-day grace period, the insurance

producer shall not solicit or sell new policies of insurance, bind

coverage, or otherwise act as an insurance producer, except that

the insurance producer may continue to service policies previously

sold and may receive commissions on policies previously sold. If

the insurance producer has not met his or her continuing education

requirements by the expiration of the 90-day grace period, the

director shall cancel the insurance producer's license. shall be

canceled. An insurance producer whose license has been canceled

under this section may reapply for a license to act as an insurance

producer under section 1204., except that the program of study

requirements under section 1204 shall not be waived.

(12) (13) An insurance producer who has sold his or her

insurance business and who has not met the continuing education

requirements of this section shall not solicit or sell new policies

of insurance, bind coverage, or otherwise act as an insurance

producer, except that the insurance producer may continue to

service policies previously sold and may receive commissions on

policies previously sold as well as receive partial commissions on

policies of insurance sold by a purchasing insurance producer. An

insurance producer who is in the process of selling his or her

insurance business and who has not met the continuing education

requirements of this section shall not solicit or sell new policies

of insurance, bind coverage, or otherwise act as an insurance

producer, except that the insurance producer may continue to

service policies previously sold and may receive commissions on

policies previously sold as well as receive partial commissions on

policies of insurance sold by a purchasing insurance producer, for

a period not to exceed 12 months after the selling insurance

producer's license review date under subsection (2). (1). An

insurance producer whose license has been canceled and who wishes

to resume soliciting or selling new policies of insurance, bind

coverage, or otherwise act as an insurance producer and who has not

met the continuing education requirements within the immediately

preceding 2-year period 12 months may reapply for a license to act

as an insurance producer under section 1204.

     (13) After 1 year after the effective date of the amendatory

act that added subsection (14), for a review date of an applicable

2-year period under subsection (1), all of the following apply:

     (a) Subject to subdivisions (b) and (c), if an insurance

producer completes more than 24 hours of continuing education in an

applicable 2-year period, the insurance producer may, for purposes

of subsection (2), apply each hour more than 24 hours to the next

2-year period. However, no more than 12 hours may be applied to the

next applicable 2-year period under this subdivision.

     (b) An insurance producer may not apply any hours in ethics in

insurance classes or coursework to the next applicable 2-year

period under subdivision (a).

     (c) If an insurance producer completes the same continuing

education class or coursework under subsection (2) in an applicable

2-year period, an hour associated with a duplicative class or

coursework may not be applied to the next applicable 2-year period

under subdivision (a).

     (14) The director or his or her designee may access any

classroom while instruction for a program of study under section

1204a or this section is in progress to monitor the classroom

instruction.

     (15) For an insurance producer program of study under this

section, the director may refuse to approve an insurance education

instructor, and the director may place an approved insurance

education instructor on probation or suspend or revoke approval of

an approved insurance education instructor, or take any combination

of these actions, if 1 or more of the following apply:

     (a) The insurance education instructor violates an insurance

law or violates a rule, subpoena, or order of the director or of

another state's insurance commissioner.

     (b) The insurance education instructor uses fraudulent,

coercive, or dishonest practices or demonstrates incompetence,

untrustworthiness, or financial irresponsibility in the conduct of

business in this state or outside this state.

     (c) The insurance education instructor's insurance producer

license or its equivalent is revoked in conjunction with a

disciplinary action in any state, province, district, or territory.

     (16) As used in this section:

     (a) "Hour" means a period of time of not less than 50 minutes.

     (b) "Insurance producer" means a life-health agent or

property-casualty agent.

     (c) "Life-health agent" means a resident or nonresident

individual insurance producer licensed for life, limited life,

mortgage redemption, or accident and health or a combination of

life, limited life, mortgage redemption, or accident and health.

     (d) "Property-casualty agent" means a resident or nonresident

individual insurance producer or solicitor licensed for automobile,

fire, multiple lines, or any limited or minor property and casualty

lines or a combination of automobile, fire, multiple lines, or

limited or minor property and casualty lines.

     Enacting section 1. Section 1204b of the insurance code of

1956, 1956 PA 218, MCL 500.1204b, is repealed.